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Editorial: A done deal is better than no deal

By Staff, The Washington Post

Updated:
12/12/2013 10:57:56 AM EST

World stock markets extended losses Thursday after an apparent budget deal in the U.S. Congress reinforced expectations the Federal Reserve will cut its monetary stimulus as early as next week. (Richard Drew/Associated Press)

There's a lot not to like in the budget deal that Sen. Patty Murray, D-Wash., and Rep. Paul Ryan, R-Wis., have struck on behalf of their respective parties and legislative houses. It does basically nothing to resolve the country's long-term fiscal predicament. It does very little to correct the growing imbalance between discretionary spending and entitlements as a share of the federal budget. And even these modest policy achievements required the use of a budgetary gimmick or two.

Yet the deal has one overriding virtue: It exists. Republican and Democratic leaders have produced a bipartisan spending plan — and one that doesn't increase the deficit through fiscal year 2015 at that. Now House and Senate appropriations committees can proceed to allocate funds within the overall caps set by the Murray-Ryan agreement: roughly $520 billion for defense and $490 billion for non-defense discretionary spending over the next two years. This eases the “sequester,” restores needed funds to defense and all but banishes the threat of a government shutdown like the GOP-engineered fiasco that so badly damaged this country's reputation in October.

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In short, the agreement's importance is not fiscal but political: It amounts to a truce in the destructive budgetary wars that have plagued Washington since the advent of a Republican-majority House in 2011. During the interlude, U.S. businesses can invest in job-creating (and deficit-reducing) growth without worrying too much about disruptions from Washington. And lawmakers can address long-term questions such as tax and entitlement reform — assuming they want to.

They should. Yes, President Obama and Congress have already achieved some long-term fiscal adjustment, to the tune of $2.7 trillion over 10 years, according to the Committee for a Responsible Federal Budget. Yet deficits are hardly the stuff of “a stale debate from two years ago or three years ago,” as President Obama suggested in a speech last week. What little deficit reduction the Murray-Ryan agreement claims to produce comes from a classic budgetary “magic asterisk”: $28 billion in promised restraint in mandatory spending (mostly Medicare) in 2022 and 2023.

Federal debt held by the public remains on course to plateau at the historically high level of 68 percent of gross domestic product in fiscal 2018, according to the Congressional Budget Office. After that, debt as a share of GDP will resume an upward trajectory, barring structural reforms. To change that, Republicans will have to get past the aversion to tax increases that prevented them from closing a single loophole in the Murray-Ryan deal, and Democrats will have to embrace far more in the way of entitlement reform than the deal's minor trims to federal and military pensions.

As a Democratic leader has said of fiscal reform: “[T]here are going to be some very difficult choices, and issues of sacrifice and responsibility and duty are going to come in, because what we have done is kicked this can down the road. We're now at the end of the road. And we are not in a position to kick it any further.”

Those words were true when then-President-elect Barack Obama uttered them just before his inauguration in January 2009; and, unfortunately, they still are.